Time for Mr. Smith to return to Washington

CBS.MarketWatch.com

WASHINGTON (CBS.MW) -- Whose town is this, anyway? Jimmy Stewart's? Or is it Humphrey Bogart's?

The projected $3 trillion budget surplus may give Washington one of those once-in-a-generation opportunities to really debate the issues, draw the lines distinctly between one alternative and the other, and let the informed electorate decide what kind of society they want.

That'd be a Jimmy Stewart town.

In one of his most memorable roles, Stewart was a naive senator who came to Washington under orders to sell out. But his naiveté was his strength. Sen. Jefferson Smith insisted on standing on his principles until he literally collapsed. It was Frank Capra's idealized version of how democracy ought to work.

How much government?

If Washington were full of Jimmy Stewarts, the Congress would be engaged in a great debate with the public about the biggest issue of our time: How much government do we want? How much government are we willing to pay for?

Do we want to insure the retirement security of all Americans? Or privatize it? Do we want to help some seniors pay for needed drugs? Or let the market decide? Do we want to build up our armed forces? Or is the world's only military superpower strong enough? Do we want to give taxpayers a break? Or pay off the debt we've built up? Do we give farmers a hand? Or let them go under as the law of supply and demand dictates? Do we invest in schools, roads and health care? Or do we invest in entrepreneurs, stock markets and start-ups?

In typical Washington fashion, we want it all. We say yes to everything. Yes to tax breaks and yes to farm aid and yes to a military buildup and yes to a patients' bill of rights.

Name of the game

Compromise is the oldest political institution. Compromise brings home the bacon, wins re-election and puts off all uncomfortable choices until they are somebody else's problem.

Sometimes compromise merely delays the inevitable. The Missouri Compromise and the Compromise of 1850 didn't prevent the Civil War or the national nightmare of slavery and racism.

Other times, the compromise buys enough time for the problem to solve itself. Maybe the compromises between President Clinton and Newt Gingrich's Congress on the balanced budget gave us enough time to grow out of our chronic deficit. Maybe if we raised taxes a little and slowed down the spending a little, we could afford the government we have.

That budget compromise opened the door to the $3 trillion surplus. But it also contained the seeds of a much greater deficit if tough decisions aren't made. The surplus is real only if Washington cuts spending much further.

Without a clear go-ahead from the public, those spending cuts won't happen. Already, the Republican Congress is falling over itself to spend more of the surplus. Who can blame them? Who wants to vote against taxpayers, sick people or family farmers?

It's Bogart's town.

Tale of greed

In John Huston's "The Treasure of the Sierra Madre," Bogie played a drifter with a heart of gold who signs up to do a little prospecting for the real thing. His character, Fred C. Dobbs, thinks there'll be enough gold to satisfy every desire he and his partners can imagine. He says he'll even walk away when he's got enough.

But the more gold they find, the more suspicious and greedy they get. In the end, of course, they were left empty-handed.

Fred C. Dobbs couldn't walk away. There was always another itch to be satisfied, just as Congress can't help showering every kind of goodie on a public that refuses to take fiscal responsibility.

That's why it would be foolish to bet against another compromise this year, one that would cut taxes by $400 billion or so, spend $50 billion a year or so more than current law allows, and put off the tough decisions on Social Security and Medicare. Both parties would have their issues for 2000: They didn't let us cut taxes enough! They're risking Social Security!

But there's a glimmer of hope. Both parties are realizing that they've almost compromised themselves to death.

"You have to have a microscope to tell the differences" between the parties, says Les Alperstein, president of Washington Analysis. "They're saying the same things." Everyone's in favor of tax cuts, and the military buildup, and saving Social Security and Medicare, and paying down the debt.

"It's just a matter of degree," Alperstein said.

"We believe that congressional Republican and Democratic leaders are under pressure from various factions within their ranks to avoid compromise lest the parties have few issues to debate next year," said Kim Wallace of Lehman Brothers in a note to clients.

Oddly, it may be a surplus of unprecedented magnitude that finally forces the national debate on taxes and spending that's about 50 years overdue. If $3 trillion isn't big enough, what could be? And if the nation can't set its spending priorities in the middle of a great economic expansion, when can it?

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